Wednesday, March 11, 2009

Weird. I just looked up Reed Elsevier’s and Thomson Reuters’ stock quotes for the recent past. In the case of Thomson, Yahoo! Finance’s charts only go back a couple of years, and in the case of Reed Elsivier they go back much further. If stock is any indication of anything at all, it’s the company’s profitability. And over the long haul, both companies are not doing well at all. The charts show a general decline. In the case of Reed Elsevier, it's about at the same place it was ten or fifteen years ago. Surprising? I think so. How in the world can companies with such great, vital products be loosing money?

Lack of foresight. They failed to create the next generation of information product when they had the means. They’ve stayed loyal to what they know: sell what you’ve got, and keep it that way! Instead of innovating and using the tools at their disposal and distributing their product with the greatest of ease, they have priced themselves and their products out of existence.

As Carl Malmud and others advocate for thorough and free distribution of all public information, and as technology and technologists rise to meet the challenge with elegance and facility, the Big Two (three, if you count Volters Kluwer) are marketing themselves out of existence despite a veritable intellectual gold mine in hand, the main things that make their products special: secondary titles, digests and indexes and compilations of all sorts.

The free public information movement will surely supplant the Big Two/Three’s ability to publish primary materials. But they can’t supplant their ability to publish the secondary materials that help us make sense of it all.

If the Big Two/Three go out of business because of poor business practices, bad judgement and lack of vision, God help us. I’m serious. If scholarship fails, (which is what secondary materials are, after all) then culture fails. When culture fails, so do civilizations.

Not to put too fine a point on it, but I think that our legal system is mighty important for maintaining order, and even if I think that it can stand with a tweak or two here of there; it’s worth saving and maintaining.

Somehow, the news that Lexis and West (and CCH) were loosing money sent a chill up my spine....

7 comments:

If you're going to make such a public comment about these two companies, you may want to check your spelling beforehand. I believe you meant to say that they are 'losing' money, not 'loosing'.

Additionally, you're reading the stock quotes for the entire corporation not just West or Lexis - there are many different elements that make up these two giants. What is quoted at the stock level may not reflect the individual businesses' profitability. Indeed, sales of print may be declining but doubtful that online revenues have fallen.

You're right to some extent about the companies' income. But as I understand it, their online services are very significant sources of revenue for both companies. Initially, for example, Mead created Mead Data Central when Lexis ended up dominating the balance shortly after they bought it.

The point I'm trying to make is that they are raising profits by increasing prices, not necessarily because they're selling more information. And I think that free services like Govtrack.us will eventually significantly eat into their revenue from the sale of primary material. At that point, they're going to need to hang on to what they truly own that's valuable: secondary materials.

At present, they think of these as print products. One problem that we libraries are facing is figuring out how to afford secondary collections, and we're canceling them left and right in order to be able to afford what little we still collect: primarily monographs and online services.

They've got to change their concept of what it is that they're selling - otherwise, sales of secondary materials will disappear and they'll be left with nothing: distribution of primary materials is soon not going to be a viable commercial endeavor.

First off, they are profitable, but not "quite profitable." At least not as I read their stock performance.

Second, I mention in the post that I was basing my opinions on their stock performance, which is flat, and even trending down.

Third, yes, they are making money by charging more per product. But that's only half the story. They are also selling half as many print products as before, and are desperately trying to retain customers through a variety of means in an attempt to show a profit.

I can tell you are not well versed in finace, which is fine. But please try to get it right. The big three publishers are "quite profitable," in fact most industries would love to have their bottom lines.

"Profitability" is not based on the stock price--as you seem to think. It is based on the percentage of profit or loss.

The stock prices are flat because the market for legal publishing is either flat or shrinking.

OK, I admit it, I don't understand finances and apologize for not recognizing the success of Thomson a Reed. I'm focusing on West and Lexis, both companies that should be profitable, but seem to be struggling - at least they're acting desperate.....

They're not selling widgets, here. They're selling very valuable tools that help researchers find cases, rules and commentary that they need to conduct research. They are effectively pricing their materials out of most lawyer's reach. Simple as that. And it doesn't matter what format it's in.

If lawyers and libraries can only afford access to cases, statutes and KeyCite/Shepard's, they're hosed. Our academic contracts neatly fold many secondary materials into our subscriptions that are not available to the public or commercial users without a premium.

Indeed, this is good news to publishers who wish to sell it all on a subscription, pay as you go basis, but it is a travesty for ordinary citizens who have to rely on libraries to get information that explains the nuances of primary law. And, the jury is still out on whether online access to treatises will actually be as useful as their print versions. But that's another issue.

About Me

I've been in law libraries since 1977, when I stumbled into a part time job as a runner/researcher in large law firm library in Century City, California. (I was in LA to find work as a writer....) Turns out I loved the work and the job security, and decided to make it a career. I went to law school at Southwestern University, where I graduated in 1981. (My undergraduate education began at Southern Oregon College, in Ashland, Oregon, and I graduated with a double BA from University of California, Santa Cruz. Yes, I was a hippie.) I was on law review and was the Entertainment Editor for the law school newspaper. I wrote music, book and movie reviews and a column called the Burger Court, in which I reviewed hamburger joints in LA. (There are a lot of them.) After law school I migrated back home to Northern California and was the firm librarian at a mid-sized firm in downtown San Jose. I eventually got my library degree at the University of Texas. Immediately after that, I moved here, and was head of public services for about two years. I then moved back home to direct a large law firm in San Francisco, where I stayed for three years. I moved back into academic law libraries in 1991, when I took the job as director at Regent University, Virginia Beach, Virginia, and, in 1994 moved to the District of Columbia to take over as director at Howard University, where I was Associate Dean for Information Technology and the Library. In 2000, I completed the curly-que and came back to Lincoln, where I am enjoying the peace and quiet.